Public Health Care In Sweden Is Actually A Big, Expensive Mess
At Mises, Klaus Bernpaintner chastises economist Dr. Robert H. Frank about his June 15 article in the New York Times, titled "What Sweden Can Teach Us About Obamacare":
First it was understood in Sweden that free healthcare was only for the poor. It would not affect those who were happy with their existing provider. But when government suddenly offers a free alternative, many will leave their private practitioner in favor of the free goods. The public system will have to be expanded, while the private doctors will lose patients. The private doctors are then forced to either take employment within the public system or leave the profession. The result is one single public healthcare monolith. Can one find economies of scale within its operations, as professor Frank claims? Maybe. But if they exist, they will be dwarfed by the costs and inefficiencies of the bureaucracy that inevitably grows to manage the system.These results are clearly visible in Sweden. There are very few private practices left. Of the few that are left, most are part of the national insurance system. A huge bureaucracy has been erected to take on all the necessary central planning of public and pseudo-private healthcare.
When Swedes go to the polls every four years, they vote on three levels of government: national, landsting, and kommun. A landsting is a regional mid-level type of government and there are 20 of them. The landstings are almost entirely devoted to managing public healthcare. They are always short on funding and regularly make losses.
The advantage of a free market system, as I am sure the venerable professor Frank knows, is that supply and demand meet to form prices. These prices are signals to the practitioners and tell them what their patients need and value most. If there were a sudden surge in demand for open-heart surgery, the price of that service would, ceteris paribus, rise. The practitioners would be motivated by the rising price to move into fields where they can make higher profits. More doctors would move to provide open-heart surgery, the capacity for open-heart surgery would increase, the increased demand satisfied and the price would drop again. Some people protest and think that it is immoral for doctors to maximize profit and live well on other people's medical problems. But why is it any more immoral than farmers profiting from peoples' hunger?
Thus, free-market systems systematically allocate capacity ("supply") and reallocate it quickly to satisfy patients' needs ("demand"). Due to competition it has the added advantage of always striving for lower prices and higher quality. This principle is as true for medical services as it is for cell phones or gardening services.
The bureaucracy of a public healthcare system cannot use market prices to allocate resources. It must use some other means. First it will try to plan according to estimated demand. It will try to guess the number of bone fractures, open-heart surgeries and kidney transplants in the coming year. The estimates will invariably be wrong, causing shortages in some places and overcapacity in others -- at the same -- which translates into human suffering and economic waste.
Without the profit motive, there is no incentive to adapt to reality, to utilize expensive equipment to the optimum capacity, to improve the level of service, or treat patients with dignity. All change will have to be pushed down from the planners above by decree. Doctors and nurses will be frustrated because they are not free to exercise their art to the best of their ability and help people as much as they would like to. Many of the best leave for other fields.
I appreciate a good deal of Frank's work, and he has been a friend to me, helping me find the research I needed for the last chapter of my book I'm completing. (I reference his work on predicting defectors and cooperators, as I did in the last one.) But Bernpaintner is right on in his criticism here.
Wanting to believe Obamacare will end up rosy is not the same thing as a realistic view of what happens when you take away incentives that free market-based healthcare provides.
My healthcare will go up, probably astronomically, under Obamacare, in part, so I can pay for a lot of people who haven't valued health care enough to be paying for it monthly like I have since my early 20s, and I'm terrified about that.







the thing is, these cycles take a long time to play out, most of a lifetime, and so they're hard to grasp for many people...
"But why is it any more immoral than farmers profiting from peoples’ hunger?"
weeeell, that's immoral too, bub, and we intend to stamp it out. in fact any profit is bad, and everyone should work for the common good. "Jeder nach seinen Fähigkeiten, jedem nach seinen Bedürfnissen!" ["from each according to his abilities, to each according to his need"]*
*except of course for those that oversee everything, they are exempt. Like Congress is exempt from Obamacare.
SwissArmyD at July 10, 2013 10:13 AM
@SwissAD: ""Jeder nach seinen Fähigkeiten, jedem nach seinen Bedürfnissen!" ["from each according to his abilities, to each according to his need"]*"
That's an ideal to which everyone should aspire. As long as I'm the one who gets to decide what people's abilities and needs are.
Old RPM Daddy (OldRPMDaddy at GMail dot com) at July 10, 2013 11:50 AM
You should be terrified of that. You may find yourself in the position of: food, housing, healthcare - pick any two.
I R A Darth Aggie at July 10, 2013 12:21 PM
From Frank's NYT Article:
To which economists is he referring?
An economist's skepticism of large bureaucracies really depends upon his economic school of thought. Those who advocate a more socialistic economic model will actually advocate larger bureaucracies.
This trope has been rebutted so many times, it's becoming tiresome.
The infant mortality rate is actually calculated differently by country. Many countries leave out children who died with a few days of birth or children who were born with little chance or no to live more than a few days. Some wait weeks to count a birth as successful. The US counts every live birth at the moment of birth.
So, scarcity is being referred to as efficiency? It's not a bug, it's a feature.
And notice the dig that only "wealthy or well-insured" patients in the US can get care quickly.
From Bernpaintner's rebuttal:
I recently had a chance to experience government-provided emergency healthcare and compare it to my insurance-provided emergency healthcare.
I rushed to the nearest hospital (not in my plan) with a non-life-threatening emergency. There was no parking, so I parked at a nearby office and hoped I didn't get a ticket. I waited in line, was entered into the system and saw a nurse for triage.
After going over my symptoms, I told her I had a medical plan and told her which one. She told me confidentially that unless I thought I was in danger of needing immediate medical assistance (fainting, heart attack, etc.), I should drive two towns over to my provider's hospital.
She explained that this hospital was the county's medicare (government-provided medical care) hospital and my wait time would be 3-4 hours at a minimum. There were no seats available in the spacious waiting room and many people standing in the hallway.
I drove over to my provider's emergency room, where I was able to park in the hospital's parking garage. The waiting room was empty and I was seen immediately by a doctor and given multiple tests to determine the cause of my distress. The tests took a couple of hours. Diagnosed, medicated, and tested, I was sent home with a regular doctor visit the next day.
The government hospital would have taken at least 3-4 hours just to get me to the doctor, another 2-3 hours for tests (assuming there wasn't a line of people in front of me waiting to be tested because the machine was being utilized efficiently), and heaven only knows on what day and time my follow-up visit could have been scheduled.
And Obama wants us to be excited to switch to government-provided care?
Of course they do. They will here, too.
Conan the Grammarian at July 10, 2013 2:20 PM
If you ever hear someone say that point out radial keratotomy was "invented" in 1974. It became really popular in the late 80's and now we're up to LASIK. And it is getting cheaper and more widespread all the time.
Then there is gastric bypass and now we have lap-band surgery. That is about a 20 year cycle.
So you can see it, but it is years, not a lifetime.
Jim P. at July 10, 2013 5:36 PM
Hey, wake up:
If you think Federal involvement in health care is anything good, then you must shut your mouth about the handling of nuclear waste, the operation at Guantanamo, troops in the Middle East...
Because the same process you admire in The Affordable Health Care Act governs those today. I wouldn't want you to be inconsistent or irrational.
I can't get a $9000 printer fixed at my Federal contractor "because it's over five years old, and something else might break". If I were outside the gate of my Federal facility, dozens of vendors would fight for my $200 for a logic board.
Guess what: these same people are going to decide when you get dialysis, a knee replacement... even anesthetics.
(Irony: the new printer I was forced to buy broke after just two hours of operation. That doesn't matter, because the "right" paperwork is filled out. Nice job, idiots.)
Radwaste at July 10, 2013 6:10 PM
Surprised to see that 'Waste would post anything this dumb. He surpassed even my low expectations.
If you think Federal involvement in health care is anything good, then you must shut your mouth about the handling of nuclear waste, the operation at Guantanamo, troops in the Middle East...
So, on the off-chance that someone thinks the Affordable Care Act is essentially a good thing, logic dictates that the government's policies in other unrelated areas are right, too. Even those policies and procedures that were implemented in the previous administration. Policies that the current administration might not even agree with, but has to withdraw gradually, and only after certain things are accomplished, so as to minimize the backlash.
I stand in awe of your staggering (lack of) logic, 'Waste. Invokes this image of you trying to get out of your house without opening the door first, then wondering why you didn't make it outside and what brought on your sudden headache.
Go telephone a pirate and wrap your car around a pole.
Patrick at July 10, 2013 6:58 PM
No, I won't say the 16K extra agents at the IRS are not going to be efficient. I'm just going to ask you to name a single federal agency that has been the epitome of efficiency, ever?
The IRS is already yelling uncle for implementing the employer mandate. So that means the IRS is inefficient or your hero, Obama, ordered them to delay it.
Please point out which way I'm wrong.
Jim P. at July 10, 2013 9:53 PM
"Guess what: these same people are going to decide when you get dialysis, a knee replacement... even anesthetics."
Aren't insurance companies the same way? When shit hits the fan don't many go bankrupt anyways? Or backtrack from agreements?
I don't think our government would be good with healthcare. And i want employers out of it. I want health insurance to be like car insurance. But I don't trust health insurance companies either.
Sweden is a great place for various reasons. I think many Euro countries have great living standards (Finland, Denmark, etc.) I know not ALL, I'm quite aware of Europes situation.
But what they can do is not what we can do ok? It's that simple. A tiny country vs a big ass diverse nation that supports intelligence and military worldwide is just not going to be the same.
Ppen at July 11, 2013 12:48 AM
Nice jerk, Patrick. Not just your knee, either.
But I knew you'd do that. No one can get away with calling for you to be consistent.
If you can show a difference between administrators who suffer no change in pay or status for the failure of those Federal programs, I'll kiss your ass. Not happening.
Because that's the principle involved, and you have a vast, undeniable blindness to the root causes of the failure of such campaigns to produce the same sort of service that stellar private industries do routinely.
I'm not sure if you have a need for a nanny or what, but you sure need to think everything will be A-OK.
I notice you don't have a solution. At all.
By the way, Ppen: health insurers have the SAME affliction. They, like Federal agents who cannot be fired for not providing service, are people with their hands out for your money without actually treating you. That they have a duty to provide a profit to their shareholders SHOULD be a wakeup call to a few things:
1) What you want for treatment will not be what you get when you do not PAY;
2) You do not get to command unlimited funds from other people;
3) The entire purpose of payment plans is to see that doctors get paid - not to treat you.
Radwaste at July 11, 2013 2:51 AM
"Aren't insurance companies the same way? When shit hits the fan don't many go bankrupt anyways? Or backtrack from agreements?"
Maybe, but at least in that case you might have some legal recourse. If a government agency mistreats you, who do you sue?
Cousin Dave at July 11, 2013 7:27 AM
Know how to identify the dumbest beast in the room?
Look for the one who expects a say when they don't pay.
If you don't pay, you're not a customer - you're a commodity.
Radwaste at July 11, 2013 7:54 AM
Maybe, but at least in that case you might have some legal recourse. If a government agency mistreats you, who do you sue?
Don't count on it. Insurance companies have much, much deeper pockets than you do, and all your spare cash will be going to pay the medical bills your supposedly good insurance didn't cover.
f you don't pay, you're not a customer - you're a commodity.
Thus the saying, "You can't have representation without taxation."
MonicaP at July 11, 2013 8:07 AM
'Waste: Know how to identify the dumbest beast in the room?
The one who thinks agreeing with one government policy means that you have to agree with all of them.
Patrick at July 11, 2013 8:20 AM
I'm just going to ask you to name a single federal agency that has been the epitome of efficiency, ever?
Like there's a single industry in the private sector that could meet that standard.
For the record, I support Federal Prisons. The private sector equivalent resulted in judges who took cash for kids.
Patrick at July 11, 2013 8:22 AM
Like there's a single industry in the private sector that could meet that standard.
Ideally, these industries would fold due to inefficiency. If they are artificially kept alive, like the former SU or China under the great leap forward, the whole state collapses.
Stinky the Clown at July 11, 2013 9:10 AM
"The one who thinks agreeing with one government policy means that you have to agree with all of them."
Not what you've done. That's why I cite your blindness.
It's not a governmental policy, but a feature of bureaucracy, which unites Federal and state programs in failure: the pay of administrators is not tied to their performance.
It's error carried forward - epitomized by your blaming luj (and several others) - for not understanding that your post didn't say what they read. If the speaker is not understood, it is the speaker's duty to make things clear to the audience. "Communication" does not mean repeating yourself and expecting a different result.
And that is why your butt remains lip-free.
Radwaste at July 11, 2013 6:37 PM
How does agency equate to industry?
The federal prison system may work overall, but that doesn't mean they are paragons of virtue.
Let's rephrase the question:
Name a government agency that you want in your life day after day; that has always made your life better?
Jim P. at July 11, 2013 7:32 PM
Coming from a country that provides free healthcare, I have a question. It is not smart-assery, but an attempt to understand the mindset.
Why are you willing to pay taxes for roads, schools, military, etc, but not healthcare?
I understand that there is an unwillingness to pay for those who do not wish to pay for those who contribute nothing. However, do you not pay for roads that welfare recipients use? Does the military not defend those on welfare?
While it does raise taxes signifiucantly, it also ensures that no person should go without healthcare.
Someone please to be 'esplainin?
wtf at July 11, 2013 8:36 PM
Amy Alkon
http://www.advicegoddess.com/archives/2013/07/10/public_health_c.html#comment-3797822">comment from wtfWhy are you willing to pay taxes for roads, schools, military, etc, but not healthcare?
I have paid for my healthcare from the time I stopped working for a big company, during my 20s. I am now 49. Why should I pay for the healthcare of those who weren't so responsible, who didn't forgo things they wanted because they valued healthcare (which I do)? Again, if you're mentally ill, we should take care of you as a humane act, I believe. If you're just lazy or want to put your money toward other things, why should I pay for you?
I think parents should pay for their children's schooling and the rest of us should contribute for the very poor. This would help keep some or even many from having children they cannot afford, while not punishing children of the irresponsible by throwing them into a permanent underclass without schooling.
The military must be paid for by all because it defends all -- it defends the sovereignty of our country. I'm for privatization of many roads. I don't pay for the Jersey Turnpike unless I'm driving on it. If I am driving on it, it's right to ask me to pay.
Amy Alkon
at July 11, 2013 9:12 PM
The military is a Constitutional requirement. The roads and schools are both extra-Constitutional but for right now they are entrenched already from an earlier time.
Obamacare is the latest and most blatant current example. What has to happen is to walk back Obamacare, then the rest. If we could repeal the 16th amendment, it would cripple a lot of this.
Jim P. at July 11, 2013 10:31 PM
"Why are you willing to pay taxes for roads, schools, military, etc, but not healthcare?"
wtf, each of those has its problems, but look at it this way for an example.
You see that some localities have private contractors building roads. Some of them are very good, indeed, new construction techniques are developed. You notice that not all communities can afford these big roads.
Ignoring the plain fact that you don't need Interstates between Hooterville and Mayberry, you realize that you could Federalize ALL road construction by requiring new standards - which have real prison time for those who desire to use a different construction company.
You establish a new cadré of bureaucrats to determine who gets to drive, when they get to drive, and even whether they get a road to their intended destination - and these bureaucrats have nothing whatsoever to do with asphalt.
Control is your goal. Not pavement.
Mao killed maybe FORTY MILLION of his own people in stupidity driven from absolute authority, his public obeying his edicts to and beyond the point of starvation. Mandating error is the hallmark of the American healthcare plan.
Radwaste at July 12, 2013 1:27 AM
Thanks guys, I might not agree, but I understand a little more now.
Coming from within the Canadian healthcare system, I can honestly say it is a comedy of errors. However, I would rather have free healthcare for all and pay for the fuck ups rather than bankrupt people for illnesses that are absolutely not their fault.
I will partially agree with Amy however. I am against OHIP providing free care for those with social diseases, in addition to free abortions, free drug treatment programs, and needle exchanges, etc.
It drives me absolutely BATSHIT that drug addicts get free needles and other supplies, but diabetics must pay for those supplies as they are not covered FOR THEM under OHIP. I can't tell you how many times I've had a diabetic patient yell at me for charging them. But just down the street crackheads get them for FREE!!!
(Contrary to popular belief, although we do receive "free" healthcare, not all services are covered. You must go to a private insurer to make up the difference.)
And Rad, the Harper and Cretien administrations could give you guys LESSONS on mandating error.
http://www.huffingtonpost.ca/2012/03/22/ornge-ontario-air-ambulance-mcguinty-liberals_n_1372626.html
Don't even get me started.
wtf at July 12, 2013 10:11 AM
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